Pay story December 15, 2016

…the grounds for such [public sector wage] increases need to be clearly identified and their opportunity cost (the concomitant changes in other spending or in taxes) needs to be carefully considered. In terms of a general increase, a rise in the cost of living could provide the basis for some adjustment, although the prospects for inflation suggest that any adjustment that might be justified here is likely to be very small.
Grounds for increases might also be provided by measures that boost productivity or by compelling evidence that pay is the cause of recruitment or retention problems. However, grounds such as these might form the basis for increases in pay for individual grades or clusters of grades, but not for across-the-board increases. In addition, there may be a case for unwinding measures that unduly penalise certain groups, such as new recruits.

But while he writes:

Interestingly, the European Commission has published a set of estimates, also for 2010, that puts the Irish premium at 21.2 per cent, compared with an EU average of 3.6 per cent.

He has to note that:

Given the trends in average pay in the two sectors since 2010, it seems likely that the public sector premium has declined further. Still, it is almost certainly the case that public sector workers continue to be paid significantly more than their private sector counterparts, on a like-for-like basis. Therefore, insofar as this type of analysis might be expected to provide an argument for a public sector pay increase, it is likely to disappoint.

But if he is correct in his assumption that the premium has declined, shouldn’t he at a minimum offer us some figures on what that premium might now be. Then he sort of pivots:

In any event, summary measures of the public-private pay differential are much too crude to provide a robust basis for assessing equity between the two sectors. There are many reasons for this, but among the most important is that such measures do not take into account critical aspects of employment conditions, such as tenure and pensions.
In general, public sector workers enjoy guaranteed, defined benefit pension entitlements and relative security of tenure. The value of both has surely increased appreciably in recent years.

If Theresa May’s government was actually listening to Carney ( instead of trying to undermine him as in reality ), they should scrap Philip Hammond’s austerity targets, raise tax revenues, shut down tax havens and take decisive measures to end the creation of low-wage, low-productive jobs. To do that you would have to re-regulate the economy and hard.

And:

At the same time, you would have to redistribute wealth aggressively. Not all of that needs to be done through taxation. If, instead of privatising public services, you ran them as non-profit corporations, providing rail, broadband and energy at prices below the cost of production, the redistributive effect would be significant. People on rock-bottom wages would suddenly have a lot more to live on.

And:

On top of that you need to actively raise wages. That needs more than a worker on the board: it needs a recognised union rep in every workplace. If Amazon, Pret a Manger, the courier industry and the construction firms were obliged by law to negotiate with unions, and to cease repressing them, there would be upward pressure on wages across the whole economy. Another way of creating that pressure would be for local and national government to hike public sector pay.

Oh really? Could that be because of the exemplary effect of higher PS wages? Or making conditions there normative? Could be! Because O’Leary is no fool. He knows that whittling away conditions in the PS isn’t going to assist private sector workers one bit. That as conditions bend and break in the PS it’s not that private sector employers will attempt to achieve parity but rather that wages in the broader economy will further fall. He knows that, we know that, and yet he continues as if none of these dynamics exist.
And that’s well before we get to the potential threats of automation.

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The shielding effect of public sector employment on standards in the commercial world are well-known, and have been for at least the past hundred years (look at the Dublin employers complaining about this very thing in opposing Corpo pay and conditions at that time).

With the possible exceptions of GAA sports, soccer and rugby there is no topic more likely to cause intense passion and heat (but very little light) than that of public sector pay in the Republic of Ireland. What follows, in this Blog, is a most dull and dis-passionate consideration of the statistics concerning public sector pay. Three questions arise:

How much is spent on public sector pay each year?

How does public sector pay, here, compare with that in other jurisdictions?

How does public sector pay compare with that in the private sector?

[…]
“In conclusion it can be said that the measurement of pay in the Irish public sector is a complex area fraught by an increasingly shrill and loaded public debate in which selective data insights are used to support particular points of view.”

A couple of things I thought were interesting in it.
Public sector pay effectively doubled between 1995 and 2001 and then doubled again from 2001 to 2008. It would be interesting to see how much of this growth was down to additional numbers of public servants and how much due to the change in the average cost of them.

The second was that the proportion of government revenue and spend was and looks like it will continue to be around a quarter (allowing for the anomalies of 2009,2010). How many public servants (and hence public services) we get for that is a direct linear – and negative – relationship to PS pay levels.

*Very* roughly speaking the % increase available for PS pay rises should equal the % rise in Gov revenue less the % increase in supply of public services (i.e. numbers of teachers/nurses/guards/whatever). A rise in taxes in return for increased public services is an argument many (not all) people could live with A rise in taxes for better paid public servants is a much tougher sell, particularly when there looks to be evidence of a significant PS pay premium present already, when pensions are taken into consideration.